IPhone seen boosting AT&T, hurting Sprint

By Sinead Carew

NEW YORK (Reuters) - Apple Inc.'s (AAPL.O) iPhone may be too expensive for most Americans, but the much-hyped device is expected to help AT&T Inc. (T.N) win quality customers and drive shoppers into its stores.

At $500, the iPhone will not convince the average shopper to buy it when sales begin on June 29, surveys show. But those with that kind of cash to spare could prove to be most valuable to the iPhone's exclusive U.S. carrier, AT&T, analysts said.

Wealthier individuals tend to pay monthly bills and are called post-paid subscribers. They are valued over customers who use prepay phone cards and tend to defect to other providers more easily.

"While there's a limited market for the price point of the iPhone it does represent the most valuable subscribers in the industry," said Stanford Group analyst Michael Nelson.

AT&T has an exclusive deal in the United States with Apple for at least two years, so anyone on another wireless network has to switch to AT&T to use the gadget.

Sprint Nextel Corp. (S.N) will likely be most hurt by the iPhone -- a touch-screen hybrid of the popular iPod digital music player and a smart phone -- as Sprint tends to attract customers who use video and music features, analysts said.

"I think it's going to be a little bit more difficult for Sprint because their customers will have a natural affinity for the product," UBS analyst John Hodulik said.

A study conducted by research firm M:Metrics issued on Friday found that two-thirds of people most likely to buy an iPhone currently subscribe to a different carrier's service.